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## BRNEY ENERAB.4 OF TEXAS AUHTIN. TEXAS 78711

The Honorable James R. Arnold Administrator Opinion No. H- 440 Governor’s Office of Traffic Safety P. 0. Box 13449, Capitol Station Austin, Texas 78711 Re: Whether film produced for state agency may be reproduced by private business enterprise and sold for aprofit where the film is inthe public. domain. Dear Mr. Arnold:

You have asked whether the conditions attached toafederal grant, used **by** the Texas Education Agency todevelop and produce traffic safety multimedia films and materials for driver education classes, permit. reproduction and distribution ofthe film and materials by aprivate business concern tothe public at aprofit.

The grant was approved by the National Highway Traffic Safety Administration (NHTSA) subject to the conditions stated inits Consultant Policy Memorandum No. Rb-B-101 ofFebruary 14, 1972, par,“
. 6(g)

(l)Before publication or print$ng, the final draft report shall be submitted to the Regional Office for review andxoncurrence.

.. .,

. . . . (2)After a report has been accepted for publication or printing, itis to be regarded as information in the public domain and its further use does not require approval. Accordingly, the published version ofthe final report shall not be copyrighted, nor contain any restrictions which prohibit distribution and reproduction..
p. 2030.

The Honorable James R. Arnold page 2 (H-440)

As used herein, the term report generally refers to an,yresult ofconsultant contracts, such as surveys, studies, manuals, guides, films,
. . . etc. Under these terms, the Texas Education Agency executed a contract with aprivate production firm providing for the development offive .(5) driver education lessons and other materials adapted for useoncertain multimedia equipment owned by theState. The final product due under the contract included “one (I)master copy of each lesson and fifty (50) sets ofeach lesson. Film stri,ps, films, and tapes must be provided with reels and in color coded containers adaptable to state owned storage equipment. ”

The contract also provided that:

Ai”‘;. II (A) The Texas Education Agency and the National Highway Safety Bureau would retain all copyrights. Title to all materials developed including master prints, internegatives and scripts will betransferred tothe TEA upon completion of Contractor’s tasks. Art. IV (B) All programs, systems, designs or other materials developed by Contractor pursuant tothis contract shall be the property of TEA, but Contractor shall have the right to use such programs for other purposes, provtded no confidential kformation is disclosed. It is dis~~m,c~lyunderstood that TEA, and any other agency ofthe State of Texas shall have the right to use, reproduce, or publish any or all of such programs, systtms, designs or other materials developed under the contract for any purpose without permission of Contractor, and without expense or charge. Inourjudgment, the rights ofparties under the State contract are subject to the condi.tions ofthe funding grant as expressed in NHTSA’s p* 2031L c

The Honorable James R. Arnold page ~3 (H-440)

Policy Memorandum N. R6-B -101. The overriding condition, recognized in the production contract, is that the product ofthe grant, once accepted by NHTSA’s regional office for publication, is forever and unconditionally inthe public domain, and may be freely copied and used byany person or agency desiring todo so without prior approval or charge for the right to COPY. The Regional Administrator ofNHTSA explained the purpose and effect ofits policy of requiring all reports, including films, to be dedicated tothe public domain:

Our Consultant Policy Memorandum R6-B-101 relates mainly to copyright aspects, in that no materials developed shall be copyrighted nor contain any restrictions which prohibit distribution and reproduction. If [the Contractor], for example, sold **a**copy ofthe multimedia materials to anagency, whether in Texas or outside the State, then any or all ofit could be reproduced or modified or used inanyway without prior approval. Since the contract has been fulfilled and the materials due the State under its provisions have been published and distributed, the film and materials produced under theagreement~may be copied and marketed byanyone, including the original contractor. The materials are now inthe public domain and may be reproduced and distributed byaprivate business concern for aprofit. G. Ricordi v. Haendler, 194F. 2d 914 (2nd Cir. 1952). Neither the State nor the original contractor has the right to exclude any other person inpossession ofthe materials from copying them, or using them. You have also asked whether the State must accept competitive bids before deciding who will be “permitted” to make copies ofthe films and material for public distribution. This would be the case if, under the contract, the State could retain a “property” interest in the materials after they were delivered. Under our interpretation ofthe grant conditions, the only property interest left to the State is the right to control access and use ofthe copies it owns. Expressly precluded is the right to “sell”
pe 2032The Honorable James R. Arnold page 4 (H440)

reproduction rights inthe driver education materiala. Anyone who obtains the materials, whether from the State or otherwise, may copy and distribute them without prior approval. Consequently, competitive bidding is unauthorized if used as ameans to restrict the right to,reproduce the films developed under the federal grant.

However, ifthe State itself intends to purchase copies inaddition to those produced under the original contract it must comply with laws relating to competitive bidding. See e.g., Article 664-3, V. T. C.S., State Purchasing Act of 1957. SUMMARY The conditions attached toafederal grant used bythe Texas Education Agency to develop and produce traffic safety films and materials for driver education classes permit reproduction and distribution ofthe films and materials byaprivate business concern at aprofit. Very truly yours,

N L. HILL Attorney General of

DAVID M. KENDALL, Chairman Opinion Committee lg Texas

pa 2033